Ethical Leadership in Turbulent Times : Ethical Leadership in Turbulent Times R. Edward Freeman
The Darden School
2002 Turbulent Times : Turbulent Times It is an understatement to say that times have changed.
The impact on business from 9/11 will continue to be enormous.
Many of our ideas about how to be successful in a particular industry must be rethought: from airlines to computers. Five Fundamental Trends for Understanding Turbulence : Five Fundamental Trends for Understanding Turbulence The globalization of business and markets.
The deregulation of business and markets on a global basis.
The explosion of information technology
The rise of environmentalism and other more “social” values as relevant to business.
The destabilization of the management and leadership in business. The Bottom Line of Turbulent Times : The Bottom Line of Turbulent Times In times of great change we need time for reflection.
The most important questions that businesses can ask today is:
What do we stand for? What is our purpose? What are our key values?
The answers to these questions form a stable platform on which we can lead our organizations in turbulent times.
So, in turbulent times we have to address issues of values and ethics. Business Ethics: Oxymoron or Pleonasm : Business Ethics: Oxymoron or Pleonasm Headline issues
Good news issues
Day to day issues
Of the phrase, “business ethics” we misunderstand only two of the words “Business” : “Business” The idea of “business” as “cowboy capitalism” is outmoded and shopworn.
Business is about value creation and trade.
Business is about creating value for stakeholders.
At a minimum stakeholders are customers, employees, suppliers, communities, as well as shareholders or other financiers. “Ethics” : “Ethics” The idea that “ethics” is about angels and organ music, or worse, that it is relative, is equally outmoded and shopworn.
Ethics always works at two levels: personal and interpersonal.
Ethics is about the most important parts of our lives, and must be center stage—especially in turbulent times. The Role of Ethics and Values : The Role of Ethics and Values Ethics and values give us anchors, stakes in the ground.
They serve as stabilizers and shields.
They empower and inspire us. They lead to everyone pulling in the same direction.
In short values and ethics can drive business strategy. Acting Authentically : Acting Authentically IIt’s not so important to play so many notes, as to mean the ones that you do play.
Warren Haynes, guitarist, Allman Brothers Band Some Real Problems With Values and Ethics : Some Real Problems With Values and Ethics We don’t always know our own values
The problem of bad faith
The problem of self deception
Values, ethics and action The Bottom Line On Values and Ethics : The Bottom Line On Values and Ethics Values and ethics help us to focus on the right questions—the hard questions—if we are honest with ourselves.
In turbulent times we need a conception of business leadership that puts values and ethics front and center. Ethical Leadership : Ethical Leadership Leadership is about making a difference to others.
Ethical leadership is making a difference to others by drawing on ethical principles and values.
Three kinds of leadership: Amoral, Value-based, and Ethical. The Amoral Leader : The Amoral Leader Focuses on effectiveness.
Often focuses on personal power and the position of leadership.
Is unconcerned about choices of the followers.
Values don’t count. Ethics don’t count. Just get the job done.
Very high human costs. The Values-based Leader : The Values-based Leader Leads from personal values.
Can be intensive and charismatic.
Appeals to followers’ values and can be incredibly powerful.
Not always open to criticism and reflection.
In the extreme can become “cult-like”. The Ethical Leader : The Ethical Leader Values and principles open to conversation and criticism.
Leadership by choice of the followers.
Followers and society taken as important elements in guiding leader.
Leader responsible for sound moral judgment. The Bottom Line of Ethical Leadership: : The Bottom Line of Ethical Leadership: The ethical leader considers all elements at once in searching for an outcome that considers the values and ethics of the leader, followers, and society as a whole.
The ethical leader is inclusive, and seeks to include others and to minimize “us” vs. “them”.
The ethical leader tries to get the right things done the right way, and fosters an open and honest “ethics/values” conversation in the organization. The Ethics and Values Conversation : The Ethics and Values Conversation In turbulent times, businesses need to have a conversation about ethics and values.
They need to answer the questions of purpose and values.
They need to make it possible for ethical leadership to step forward at all levels of the organization. Slide 18: Chris Galvin, CEO, Motorola We decided that we’d be willing to change absolutely everything, except our principles. The Ethics and Values Conversation : The Ethics and Values Conversation Focus on purpose not profits.
Relentlessness and consistency.
The importance of challenges to values and ethics.
Make the conversation come alive.
Make the ethics and values drive the systems.
Make the ethics and values drive innovation and change. The Bottom Line of the Ethics and Values Conversation : The Bottom Line of the Ethics and Values Conversation You only get one chance. You have to mean it.
You have to know yourself, as an ethical leader.
What are your own values?
What is your purpose?
The calendar test
The Ben, Emma, and Molly Rule. Summary : Summary We need to understand the forces at work in turbulent times.
We need a new commitment to ethics and values as central to business.
We need to become and foster others becoming ethical leaders.
We need a new conversation about the role of ethics and values in our organizations. Traffic Tickets : Traffic Tickets For years, Company Y (based in the U.S.) has had a strict anti-bribery policy. When confronted with randomly issued traffic tickets in Country X, Y considered it proper to contest the tickets in court. But as Y soon learned, going to court turned out to be costly and time consuming, while simply paying off the traffic cop made much more business sense. Company Y execs.were torn between their personal conviction that bribery was wrong in any form, and the prevailing standards in Country X which indicated that the payoffs were standard practice. Their competitors had no such policy. Should Y change its strict, no-bribery policy? The Motorcycle Accident (A) : The Motorcycle Accident (A) While on business in Country X, Chris is traveling on a motorcycle one weekend seeing the sights. Chris runs into an elderly man who stepped off the curb right in front of Chris. Under local law, Chris was automatically the guilty party. A policeman approached Chris, saying that something had to be done for the victim was not badly hurt but who was shaken up for a brief moment. The officer suggested US$200, which Chris knew was the equivalent of two years pay for the officer. Chris also believed that paying the US$200 would avoid arrest. What should Chris do? The Motorcycle Accident (B) : The Motorcycle Accident (B) You are the country manager in Country X, and you get a call from the police that one of your company’s employees, Chris, has been arrested. You call your in country lawyer, who tells you that you need to go down to the police station with $500 in cash. If you give this money discreetly to the person in charge, Chris will be released and all charges dropped. What should you do? Slide 25: Customs (A) Your company is doing business in Country X, and you
have recently been appointed to the position of Country
Manager. Your country is a mfg. operation and exports
most of the goods made in X. You are told of a problem
with delays in customs in X. It is customary to make cash
payments to customs officials (whom you understand are
very poorly paid) in order to expedite the handling of
critical inputs to your mfg. process. You have complained
to higher officials in the past and some disciplinary actions
were eventually taken. However, the system of payments
still remains largely unchanged. Delays are expensive.
Would you make the payments? Why or Why not? Working While Muslim : Working While Muslim In late October 2001, Tony Weldon, manager of Costright Overnight Shipping’s sorting center at La Guardia Airport, heard a rumor that one of his contract mechanics, Mamoun Sakkal, was periodically slipping into the company’s flight-simulator room. In the wake of 9/11, the company had been on high alert for suspicious activity.
Weldon struggled with what to do. Should he report Sakkal? Question him? Was he targeting Sakkal because of his nationality, when he knew that he would think little if he heard that a Caucasian was disappearing into the flight simulator room? Slide 27: Case of the Found E-Mail You are diligently doing your e-mail one day when you notice
a message from Karen, a good friend of yours who works in
strategic planning at a competitor. You were in college together
and have occasionally kept in touch with each other. The last
time that you saw her was at an industry trade association dinner,
and you exchanged e-mail addresses. Karen had seemed
disenchanted with her job and her prospects at her current
company. You begin to read the e-mail and it becomes apparent
to you by the 2nd or 3rd paragraph that Karen is telling you
about some major new strategic initiatives of her company.
You “scan” to the end of the message and Karen asks whether
there might be opportunities for her at your firm. What should
you do? The Intermediary Problem (A) : The Intermediary Problem (A) XYNet is an ISP with its own search engine. The owner/entrepreneur of XYNet believes that pornography objectifies women, potentially harms children (as well as women and men) and should not be a legitimate business. Should XYNet allow web sites with XXX rated material? Should the owner/entrepreneur be able to make that decision? The Intermediary Problem (B) : The Intermediary Problem (B) A customer goes to a site through the XYNet search engine, and is harmed by dealing with that site. [The harm could be that the site is fraudulent, or it could be illegal for the customer to visit the site, but the site has no real verification.] Should XYNet be responsible for what happens to the customer? The 9/11 Jitters : The 9/11 Jitters Chris is a senior manager at XYZ, who has received great promotions, bonuses and kudos over the last several years. He is in line to replace you as CEO in a few years. However, after 9/11 Chris is hesitant about going to New York or any large city that might be a terrorist target. For 2 months he has found what look like “excuses” to you to avoid traveling. You confront Chris and she admits that she just doesn’t want to be in a large city for a while. You believe that it is essential to Chris’s job performance to interact with customers, many of which are based in urban areas. What should you do? Credible Information : Credible Information You are a senior manager at the FBI. You have received credible information that there will be a large scale “terrorist event” in either New York or Washington at the end of this month. Your best friend’s son (your godson) has scheduled a trip to New York coinciding with this time frame. What should you do?